Real estate on the board agenda: from lease to leverage
In June 2026, as part of London Tech Week, Penningtons Manches Cooper joined the Tech London Advocates’ PropTech working group, to host a senior-level roundtable titled ‘Real estate on the board agenda: from lease to leverage’. Now in its second year as a fringe event of London Tech Week, this gathering brought together leaders from across commercial real estate, occupier organisations, and the proptech sector for a candid and forward-looking conversation.
The roundtable set out to explore how commercial models, operational capability, and governance need to evolve if organisations are to unlock greater value from their real estate, and importantly, what is holding them back from doing so.
From operational overhead to strategic asset
The opening discussion centred on a key question: what would cause a board to treat real estate as a strategic asset class rather than an operational overhead? The consensus was clear: risk is the primary driver, but it is often not well understood until it becomes a crisis.
The concept of stranded assets featured prominently. Buildings that are energy-intensive, poorly rated or dependent on fossil fuels represent capital risk that compounds quietly until a lease renewal or refinancing event forces the issue. The risk is not static; it is tied to energy profile, age, investment requirements and, increasingly, the pace of regulatory change. Boards that are not mapping their portfolios against these variables are accumulating risk.
The talent dimension added a further layer. Several attendees noted that the quality of a building has become a genuine factor in attracting both occupiers and their workforces, particularly in urban and Grade A+ markets. Central London assets with strong amenities are competing successfully for tenants; those below that threshold are finding the conversation harder. For industrial occupiers, including large-scale logistics and warehousing operations, the challenge is different: the question is whether buildings will attract a workforce to use them at all.
The discussion also surfaced the risk of short-termism. Workspace utilisation data, now widely available through wireless technology and access control systems, is helping organisations understand how their space is actually being used. But the more important and frequently overlooked question is what the five-year picture looks like. Releasing floor space that cannot be recovered without significant cost is a real and recurring mistake. Buildings are still too often treated as commodities; the shift to treating them as assets, with real-time monitoring, forward planning, and board-level oversight, remains incomplete.
Grid constraints were also raised as an under-appreciated board-level risk. In parts of the country, available headroom on the grid is actively preventing organisations from growing, affecting both property values and strategic options. The regulatory environment in the UK, more constrained than many comparable markets when it comes to demolition and retrofit, was cited as a genuine impediment to the kind of transformation that London’s position as a tech hub would otherwise support.
Leases, operating models, and the future-fit building
The roundtable then discussed where legal and commercial frameworks currently stand: the lease of today is largely indistinguishable from the lease of 10 years ago. Green clauses exist, but their practical effect on landlord and tenant behaviour remains limited. The fundamental structure has not kept pace with the complexity of what is now being asked of buildings.
The relationship between landlord and tenant specification emerged as a recurring tension. Landlords are investing in building infrastructure – for example solar panels, smart systems, and energy-efficient plant – only for tenants to fit out in ways that undermine that baseline. The landlord’s EPC may look strong on paper; the building in use is a different story. The challenge is not simply technical but commercial: how do you align the incentives of a landlord who wants to protect asset value with a tenant who wants to minimise service charge exposure?
There was broad agreement that flexibility in lease terms is increasing, but the traditional five or 10-year lease continues to dominate where landlords have market power, with shorter leases attracting a premium. Break clauses are more common, but the real opportunity, attendees suggested, lies not in lease length but in what the lease contains, including provisions around data sharing, fit-out standards, and ongoing energy performance obligations. Good landlords are already asking tenants not to diminish EPC ratings on fit-out and are building collaborative relationships around data. That model, however, realistically functions only in a small number of Grade A buildings. For a landlord in a 1980s office in a regional city, the dynamic will feel entirely different.
On the question of what drives change – regulation or incentive – the room leaned toward the former. The view was that collaborative, mutually beneficial relationships between landlords and tenants are genuinely possible, but that without a regulatory push, the incentive to change remains insufficient for most of the market. Compelling case studies exist where energy efficiency measures pay for themselves, and where incentive structures, such as discounts for tenants who reduce their energy usage, are driving real behaviour change – but these remain exceptions rather than the norm.
Underestimated board-level risks: cyber, data, and compliance
The discussion on risk moved into territory that many boards have yet to fully confront. Cybersecurity, in particular, was identified as a significant and growing exposure that is rarely receiving the attention it warrants. As buildings become more connected, with building management systems, access controls, IoT sensors, and energy monitoring all creating interconnected networks, the attack surface expands considerably. Buildings are only as secure as their weakest link, and that weakest link is frequently operational technology installed by facilities teams without formal security expertise.
Examples from the room were illuminating: access control systems in major commercial buildings with default or guessable credentials, or network infrastructure accessible to anyone who can physically access a server room. Penetration testing, network segmentation, and multi-factor authentication were identified as practical and achievable points, but the cultural shift required to make cyber security a board-level concern in the context of real estate remains significant.
Data governance surfaced as an equally complex issue. Boards are increasingly requesting access control and occupancy data to support decisions on space utilisation, fire certification, and operational planning, but are often asking the wrong questions or misinterpreting the data they receive. Access control records who enters a building; it does not always reliably record who has left. Using the same dataset for fire safety purposes as for utilisation analysis introduces serious accuracy and legal risk. The message from those working directly with this data was clear: before asking for it, boards need to understand what they actually need it for.
The fragmented ownership of real estate responsibilities across legal, operations, and HR functions, each with their own tools, teams, and blind spots, was raised as a structural problem that compounds all of the above. Real estate is frequently one of the top two fixed costs in any organisation, often rivalling or exceeding payroll. The legal exposure for directors who get compliance wrong is already significant; with IFRS 16 bringing lease liabilities onto balance sheets from next year, it is about to become considerably more visible.
Energy and carbon: what do boards actually know?
A research piece commissioned in 2025 provided some context to the discussion. Of the businesses surveyed on decarbonisation and retrofit, only 28% had a carbonisation plan, and fewer still had a formal energy plan. Around 25% intended to retrofit; the majority did not. Lack of finance was the most commonly cited barrier, with SMEs significantly less likely to have taken action than larger organisations. The most common measures taken included energy efficiency upgrades, onsite renewables and mechanical and electrical improvements.
Sustainability certifications, EPCs, BREEAM ratings and similar were noted as an imperfect proxy for actual performance. EPC ratings are not reliably indicative of energy inefficiency in practice; in-use performance and rated performance frequently diverge. This matters because occupiers increasingly require sustainability credentials as part of their own reporting obligations, and those credentials need to hold up to scrutiny.
The question of whether owners or occupiers actually understand their energy data drew a mixed response. The answer, in most cases, was that they have access to data but lack the context or governance structures to use it effectively. Internal silos across energy, procurement, HR, and operations teams each hold part of the picture, but none have a holistic view. The call was not simply for more data, but for better integration of that data into board-level decision-making.
The role of AI
The session closed with a discussion on AI’s role in commercial real estate, a sector that, by the room’s own assessment, remains behind many others in its adoption. There was genuine enthusiasm for specific applications: lease and title review tools that can surface risks efficiently; AI-assisted planning applications; energy flexibility modelling; predictive maintenance for building systems; and the use of geospatial and operational data to support portfolio management decisions.
However, the cautionary notes were equally strong. AI is only as good as the data it is trained on, and in a sector characterised by fragmented, inconsistent, and often incomplete datasets, that is a significant constraint. One observation was particularly sharp: the energy consumed by AI systems themselves can, in some applications, outweigh the energy savings they are supposed to deliver. The question of why you are using AI, not simply whether you can, is one that boards should be asking more rigorously.
The consensus was that AI will not produce a single platform solution for commercial real estate. The sector is too fragmented, the drivers too varied for any one tool to serve all needs; a real estate investor, a developer, and an occupier will each have fundamentally different priorities. But the opportunity to use AI to surface insights, reduce manual overhead, and improve the quality of board-level decision-making is real, and the organisations that move purposefully will be better positioned than those waiting for the market to mature around them.
Closing thoughts
The roundtable ended with final thoughts from hosts at Penningtons Manches Cooper and Tech London Advocates PropTech:
Ben Law, commercial real estate partner at Penningtons Manches Cooper, observed: “What today’s discussion makes clear is that real estate needs to be a living item on the board agenda, not something revisited only at lease renewal. The organisations that treat it as a strategic asset, with the data and governance to match, will have a material advantage over those that do not.”
Oliver Kidd, partner in the IP, IT and commercial team at Penningtons Manches Cooper, noted: “The introduction of new technologies into buildings creates legal and operational complexity that contracts are often not yet equipped to handle. Boards need to ensure that agreements with landlords, tenants, and technology providers clearly define responsibility for data, cybersecurity, and interoperability, because when things go wrong in a connected building, the question of who is accountable is rarely straightforward.”
Mark Jenkinson, co-lead of Tech London Advocates PropTech and director of Crystal Associates, commented: “We are still having to make the case that real estate is a strategic asset rather than a fixed cost and that energy should be firmly on a board’s risk register. The technology, the standards and the commercial models to change that exist today. What is missing, in many organisations, is the board-level ownership to break down the silos, drive transparency with the right data, and thus make the right strategic investment decisions. That is the conversation we need to keep pushing.”
Penningtons Manches Cooper and Tech London Advocates PropTech working group would like to thank all attendees for their contributions to what was a rich and candid discussion.